The zinc finger nuclease monopoly

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The zinc finger nuclease monopoly A delicate balance
At issue is Sangamo’s rule-based library of
combinations of two and three zinc fingers for
A decade of sound science and aggressive deal making has targeting longer DNA sequences. Thirty-two
GNN and ANN triplets—the basic unit of
given Sangamo Biosciences a stranglehold on zinc finger recognition of zinc fingers (see p. 967)—are
technologies. Now, academic labs that helped build Sangamo’s in the public domain; a complete set of 64
with operating instructions would, in princi-
empire want in on the action. Are the ingredients ripe for a ple, be enough to design ZFNs with uncom-
revolt that could break the company’s monopoly? Christopher mon sequence specificity, especially to those
disease genes buried deep within the human
Thomas Scott investigates. genome’s three billion base pairs. The zinc
finger grapevine is buzzing with rumors that
Sangamo is slow to respond to requests for
materials and is making negotiations diffi-
In Richmond, California, just across the bay would be to confer long-term resistance to cult with licensees.
from San Francisco, the secrets of a cutting- HIV by disabling the gene for CC-chemokine A failed deal with Phytodyne, a plant biotech
edge technology that could transform gene receptor 5 (CCR5) by nonhomologous end company based in Ames, Iowa, has added to
therapy lie hidden in the intellectual prop- joining in stem cells (Box 1). the unsettled mood. Its founder, Dan Voytas,
erty (IP) vaults of a small biotech company. Meanwhile, Sangamo’s proprietary data- a respected gene-targeting expert, has left the
Sangamo Biosciences holds key patents and base of zinc fingers has academic experts both company to return to the University of Iowa.
trade secrets not only on the design of zinc excited and nervous. Researchers want access Voytas had negotiated an exclusive license to
fingers and zinc finger chimeric endonucle- to the library to optimize and refine the ZFN an invention made by the University of Utah’s
ases (ZFNs), but also on their uses in drug platform for applications in gene therapy, Dana Carroll, who demonstrated targeted
discovery and the regulation of gene expres- gene regulation and gene replacement. Some gene replacement in whole organisms—but
sion (Table 1). The technology has prompted are already tied to Sangamo by licensing he also needed a sublicense to Sangamo’s ZFN
excitement in gene therapy circles, not least agreements (through their respective insti- patent based on work by Baltimore’s Johns
because of the recent demonstration in a tutions). Yet even those whose inventions Hopkins University’s Srinivasan (Chandra)
Nature paper of highly efficient and perma- are part of the patent estate instrumental to Chandrasegaran, a ZFN pioneer and former
nent correction of a mutated gene associated the company’s fortunes are often not privy advisor to Sangamo. The deal fell through.
with severe combined immune deficiency to key aspects of the technology; many, for Reportedly short on cash, Phytodyne is not
(SCID)1. Will Sangamo hold the keys to example, lack the know-how that made the expected to survive. “The Sangamo patent was
the zinc finger kingdom, or will it yield to IL-2Rγ gene replacement experiments in essential, and price was a big factor,” Voytas
pressure to make its technologies widely SCID-derived cells possible3. Sangamo says says. Sangamo CEO Edward Lanphier agrees
available? it must control its IP to maintain value and that money was the key. “We felt Phytodyne
ensure its survival; making the IP freely avail- is very strong scientifically, but doesn’t have
Unbounded excitement, bounded able to academic laboratories relinquishes financial staying power.”
technology that control. It is a familiar refrain at the To its credit, Sangamo has put dozens of
Engineering a zinc finger nuclease (ZFN) to interface of industry and academia. materials transfer agreements in place with
introduce a double-strand break at a specific
single chromosomal locus and induce homol-
ogy-directed repair with an exogenously
added donor DNA sequence promises a com-
pletely new means of gene replacement in
cells and whole organisms. Unlike traditional
gene therapy, ZFN therapy may avoid prob-
lems of insertional mutagenesis that have
plagued certain retroviral gene therapy tri-
als in SCID2, eliminate the need for large and
unwieldy exogenous donor DNA sequences
(which encode both protein and appropriate
regulatory molecules) and not suffer from
inappropriate tissue specificity, timing and
Sangamo BioSciences, Inc.
level and duration of expression.
In April, Sangamo demonstrated for the
first time that ZFNs could correct the gene
encoding human interleukin 2 receptor-γ
(IL2Rγ), which underlies X-linked SCID3. But
the company is already busy thinking beyond
remedies for SCID. One potential applica-
tion of the ZFN technology, for example, Zinc fingers doing their magic on DNA.
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Table 1 Selected recent patents issued to Sangamo
Title Patent number Year of issue Year of expiration
Regulation of endogenous gene expression in cells using zinc finger proteins 6,824,978 2004 2019
Iterative optimization in the design of binding proteins 6,794,136 2004 2020
Selection of sites for targeting by zinc finger proteins and methods of designing 6,785,613 2004 2019
zinc finger proteins to bind to preselected sites
Functional genomics using zinc finger proteins 6,777,185 2004 2019
Nucleic acid binding proteins (zinc finger proteins design rules) 6,746,838 2004 2018
Screening system for zinc finger polypeptides for a desired binding ability 6,733,970 2004 2019
Regulation of endogenous gene expression in cells using zinc finger proteins 6,607,882 2003 2019
Functional genomics using zinc finger proteins 6,599,692 2003 2019
Methods of using randomized libraries of zinc finger proteins for the identification 6,503,717 2003 2020
of gene function
universities. The dissatisfaction isn’t with ing in line. “They have good scientists doing Texas Southwestern’s Matthew Porteus, co-
the agreements themselves but with the strong science,” the gene therapy expert investigator on April’s Nature SCID paper3.
way that Sangamo controls the interaction. says. “But they must get through this honey- Whether Barbas (who was unavailable for
Investigators who want zinc fingers send the moon period of excitement.” The company comment) has the remaining triplets is a
desired sequence to the company. The com- will need to enlist collaborators like Kay as mystery. Whether he will file them as inven-
pany builds the nucleases, and sends them they move deeper into gene therapy terri- tions or release them to the public is a bigger
back. The ‘rule set’ remains protected. “This tory. Despite the encouraging SCID results, question still.
ZFN stuff is really hard,” says Sangamo’s the standard hurdles, such as targeting, deliv- Finally, there is the ‘rule set.’ Having access
senior research director Phillip Gregory. “It ery and immunogenicity, still apply3. Taken to the triplets is only half the battle—the real
is not trivial to make a nuclease that will do together, the message from the zinc finger value is the informatics used for selection and
exactly what you want.” The work is so exact- community is that the number and produc- assembly. Dana Carroll suggests Sangamo
ing that the company has a core group of bio- tivity of Sangamo’s current alliances may consider open access. “We’d be more com-
chemists that do nothing but design, select predict whether Sangamo will have academic fortable if they were generous about letting
and optimize chimeric nucleases. Gregory partners to tackle thorny problems later. others pursue the technology,” he says. “We’d
hopes that in the future, the library will be The charged atmosphere has even pro- make faster progress if many people work on
made public. “From a scientific point of view voked sleuthing among the academic labs. it.” Chandrasegaran, although acknowledging
it would be great to have the archive public. Chandrasegaran muses, “I hear Scripps the need to control IP, says, “They should open
The concern from the business side is that Research Institute’s Carlos Barbas has [the library] up and let everybody use it—or at
this is hard to do well, and we want people developed the other 32 triplets.” Barbas’ least make it easer for people to use it.”
to be successful.” laboratory, which has the ability to design
and assemble three-finger sets, is watched The art of licensing and acquisitions
The natives grow restless with great interest. “I’ve checked the patent “Things are a bit lonely,” frets Sangamo’s
In the meantime, those eager to work with records, and it looks like Carlos has a patent Gregory. It is no wonder he feels left out. A
Sangamo wait. In California, Stanford pending on CNN triplets. There are rumors decade of aggressive licensing and one very
University’s Mark Kay is one of those stand- he has the TNN triplets,” says University of well-timed acquisition means his company is
Box 1 Diversification and development
The ZFN-induced repair of X-linked SCID overshadows the five analysts follow Sangamo’s fortunes—to expect at least one
fact that 50% of Sangamo’s scientists have been busy taking more alliance in 2005 and others down the road.
transcription factors to the clinic. In 2000, Edwards Life On the balance sheet, the company looks more like a standard
Sciences (a spinout of Baxter) inked the first therapeutics deal biotech gearing up for another round of financing. With $20
using a zinc finger protein transcription activator for vascular million in cash and a two-year operating window, what will
endothelial growth factor (VEGF) to promote angiogenesis. The Lanphier do as Sangamo enters the next phase of development,
$25 million partnership propelled two phase 1 clinical trials for including the treacherous waters of gene therapy? “This is the
peripheral arterial disease, one at Duke University, the other at phase where I’ve had the most experience,” he says. “If we’re
the US National Institutes of Health. Sangamo has opened its successful in the clinic, then our IP becomes a significant
own VEGF trial at sites in Texas and San Diego. Gregory notes part of our asset value. The combination will give us cash and
that the company’s clinical research has revived the interest of financing from the public markets.” It seems so. With 30 issued
pharmaceutical companies looking for collaboration. Indeed, patents, 70 patents pending, three open investigational new drug
Sangamo announced deals with Pfizer and Thousand Oaks, applications and preclinical results demonstrating the power of
California-based Amgen this year. Lanphier is so confident of the ZFN-mediated gene correction, Sangamo has the equivalent of
partnering ability of his company that he has told Wall Street— three hotels on a purple swath of Park Place.
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the only commercial player in a red-hot field performed elegant work engineering zinc Shaking up empires
of chimeric nucleases. fingers to regulate gene expression. Later he Can a patent empire be broken? The answer to
Gregory knows there are two edges to joined Sangamo as chief science officer, and this question depends on two things: demand
this sword. “We’re fortunate,” he says. “Our he now chairs the company’s scientific advi- and old-fashioned one-upsmanship. Those
intellectual property is very robust.” Robust sory board. For his part, Barbas uses a phage with sufficient expertise and resources who
indeed—the research director can’t name display system to select single zinc fingers want something bad enough can attempt
a company he’d consider a competitor. with high affinity and couples activator and to design around, over, or above the state of
The downside is that Sangamo’s monopoly repressor domains to the proteins to regulate the art. Dan Voytas says he will do just that.
doesn’t lend itself to unfettered collabora- gene expression. “I received a $2 million National Science
tion. “It’d be nice to have plenty of people Lanphier’s energetic hoovering of tran- Foundation grant, and rather than pursue a
working on zinc fingers,” he says. scription factors and ZFN technologies began commercial strategy, I’ve decided I’d rather
How did Sangamo reach its catbird’s to swell his patent coffers. Exclusive licens- disseminate the technology,” he says. “We will
seat? Credit CEO Edward Lanphier. In 1995, ing deals with Matthew Porteus in 2003 and design our own set of rules, software tools and
Lanphier was head of business develop- Dana Carroll in 2004 sewed up technologies vectors—anything that enables the technol-
ment and chief financial officer of Alameda, that reduced ZFNs to practice. Porteus, then ogy—and make it available to as many people
California’s Somatix Therapy, a vector-based working in David Baltimore’s laboratory as possible.”
gene therapy company. Responsible for the at CalTech, was the first to show that ZFNs Kathleen Williams, a Boston-based IP attor-
company’s ‘patent estate,’ he licensed in tech- were active in human cells; Carroll perfected ney and biochemist specializing in biotech pat-
nologies to compliment Somatix’s founda- mutagenesis and targeted gene replacement ent estates, notes that Sangamo’s IP position is
tional IP. Biotechs rarely survive without a in whole organisms, including Drosophila unusually strong, especially when it comes to
strong IP portfolio: it is a crucial measure of melanogaster. circumventing cDNA patents. No recombinant
value that can bring new capital and court- A year after an initial public offering in genes are necessary because zinc fingers do
ship opportunities with big pharma. 2000, Sangamo’s cemented its dominance by their work in situ. Zinc fingers free Lamphier
Somatix’s proprietary core was a gene vec- acquiring London-based Gendaq, a highly from the yoke of in-licensing enabling tech-
tor delivery system. Executing deals is what respected gene regulation firm founded by nologies. “This is what our law promotes. It
business development professionals are paid is a legal, smart and strategic way of making
to do, and Lanphier found that he couldn’t business goals effective” Williams says.
do the deals he wanted or had to strike mul- The research director can’t On the other hand, monopolistic prac-
tiple agreements that stacked royalty pay- name a company he’d tices invite competition, and in the case of
ments. “We had a great system, but limited academic laboratories, willful infringement.
access to proprietary genes,” he recalls. consider a competitor. The For decades, university laboratories have
While beating the bushes, Lanphier downside is that Sangamo’s used patented methods and tools without a
noticed the work of Chandrasegaran, who license. The private sector turns a blind eye,
had invented a method to fuse a DNA bind- monopoly doesn’t lend itself to knowing that suing an ivory tower would be a
ing domain of 3 zinc fingers to a cleavage unfettered collaboration. public relations disaster. Despite this practice,
domain of bacterial type IIS restriction Williams sees the zinc finger field as ripe for
enzyme, FokI. Somatix wasn’t interested in an a fight. Claims to proteins and DNA are more
enzyme that could bind DNA with amazing Sir Aaron Klug, a 1982 Nobel Prize winner narrowly written now than a decade ago, and
precision, but Lanphier was. He left Somatix and former director of the Medical Research as a result, easier to invent around. She con-
to found Sangamo in 1995 with $750,000 and Council Laboratory of Molecular Biology in tends there is plenty of federal circuit law that
an exclusive license to the Chandrasegaran London. “At this stage, the platform needed supports “design-arounds,” adding, “Anything
patent (Somatix merged with Cell Genesys in work,” Chadrasegaran recalls. “Once they got that can stand next to an existing invention
1997). From 1995–2000, the Johns Hopkins to Klug, they had the market cornered.” The as complimentary or alternative is strongly
chemist sat on Sangamo’s advisory board. He $30 million buyout netted Sangamo a phage encouraged in the law.”
remembers the early touch-and-go period of display methodology and rules for designing The mere threat to innovate can spur a
the company fondly. “We had a lot of fun, a modular library of two zinc finger sets, cat- company holding a monopoly to loosen its
keeping the company going, worrying about alogued by amino acid substitutions in the grip. In the mid-1990s, Affymetrix’s high
its survival.” protein’s binding region. Company chemists prices and tough negotiating tactics prompted
added more sets and validated the library. Stanford University’s Patrick Brown to devise
Priming the pump The result is the bedrock of Sangamo’s IP: novel means for making gene chips, which he
The association with Chadrasegaran was an informatics-powered commercial archive published on the Internet. That, along with
providential. Chandra, as peers and students of two-finger zinc finger proteins. The sys- a growing dissatisfaction from the genomics
call him, introduced Lanphier to the best tem correlates specificity, affinity and bind- community, prompted the chip company to
zinc finger chemists in the world. Licensing ing characteristics for a chosen DNA target. offer affordable licenses to nonprofit institu-
agreements and critical hires soon followed. Once selected, two or more zinc finger pro- tions. Similar pressures and an unsuccessful
He met Cambridge-based Massachusetts teins can be joined to make four-or six-finger infringement suit against a score of academic
Institute of Technology’s (MIT’s) Carl proteins. A pair of high specificity four-fin- laboratories forced Berkeley, California-based
Pabo and Carlos Barbas, a young molecu- ger ZFNs (one manufactured for each half of Cetus (which was bought out by Emeryville-
lar biologist working at Scripps in La Jolla, the dimer) was used to correct the X-linked based biotech Chiron), who then owned the
California. Pabo, a world-renowned crystal- SCID gene, IL-2Rγ, reported in the April patents, to distribute and discount its new
lographer and Howard Hughes investigator, issue of Nature3. PCR technology more broadly4.
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Innovating around patents Sangamo’s Lanphier and Gregory maintain
Finally, consider the direct assault. The zinc
“There are more smart zinc that their academic agreements are essential
finger rumblings have reached Canberra, finger and recombinant to the company’s success. Now that ZFNs have
Australia, where Cambia’s Richard Jefferson, cleared the first therapeutic proof-of-concept,
scientists in the world than
open-source guru5 is mulling over which bio- physician-scientists such as Porteus have begun
tech windmill is ripe for another tilt. Likewise, Sangamo can ever hope to to shift their attention to the needs of patients—
Jefferson’s attempt to bypass Monsanto’s have inside their company.” in his case, sick children with genetic diseases.
Agrobacterium tumefaciens patent estate has “An open resource would generate enormous
caught the attention of stateside zinc finger good will,” Porteus says. In the end, it may be
protein laboratories6. the scientists who are part of Sangamo’s patent
Jefferson argues that a monopoly isn’t innate Jefferson and patent reformer David estate, rather than the patents themselves, who
to the IP of a single company; the brute force Martin, of the University of Virginia’s busi- determine the direction of this exciting field.
of numbers and sheer innovation can break a ness school, believe that patents are over- Christopher Thomas Scott,
monopoly. “There are more smart zinc finger valued by investors who don’t appreciate San Francisco, California
and recombinant scientists in the world than that under a challenge, inventions can be
Sangamo can ever hope to have inside their found to be worth little or nothing at all. 1. Kandavelou, K. et al. Nat. Biotechnol. 23, 686–687
(2005).
company,” he argues. The first task, according And, the courts invalidate or alter around 2. Hacein-Bey-Abine, S. et al. Science 302, 415–419
to Jefferson, is to produce a detailed, publicly half of litigated patents. Martin noted in a (2003).
3. Urnov, F.D. et al. Nature 435, 646–651 (2005).
available “patent landscape” that describes the June Washington Monthly interview that the 4. Ducor, P. Nat. Biotechnol. 17, 1027–1028 (1999).
field. The second is to exploit the weaknesses Chinese are already probing the margins of 5. Herrera, S. Nat. Biotechnol. 23, 643 (2005).
through a collaborative open source project American monopolies, including Pfizer’s 6. Broothaerts, W. et al. Nature 433, 629–633
(2005).
that invents beyond the monopoly. New tech- (New York) Viagra (sildenafil citrate) and 7. Roth, Z. Washington Monthly, p.12–19 (June
nologies are then made freely available. Lipitor (atorvastatin)7. 2005).
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